Iowa View: Job regulations: Public vs. private interests

State shouldn't decide who can fill a job, except for health, safety

May 16, 2013

Jerry Wright cuts the hair of Rawley King of Waukee at Jerry's Barber Shop in Waukee on New Year's Eve in 2008. A national study by the Institute for Justice, a national advocacy organization, found that Iowa has some of the most stringent licensing laws for low- and middle-income occupations. / Holly McQueen/Register File Photo

Written by

Darrell Hanson

ABOUT THE AUTHOR DARRELL HANSON, now of Altoona, represented Delaware County and surrounding areas in the Iowa House from 1979 to 1994. He is a former member of the Iowa Utilities Board and served as chairman of the Iowa Environmental Protection Commission. Contact: darrellhanson2@gmail.com.

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Every year, hundreds of Americans die from eating improperly cooked food. To my knowledge, nobody has died because of substandard floral arrangements or poorly braided hair.

So why do some states require flower arrangers or hair braiders to be licensed, while just about anyone is allowed to cook in a restaurant? Why does Iowa require hairdressers to have 17 times more training than emergency medical technicians?

As with many questions relating to occupational regulation, the answers have little relationship to public protection.

According to University of Minnesota economist Morris Kleiner, licensure adds about 15 percent to licensees’ incomes, mostly at the expense of consumers. I experienced firsthand one of the ways this can happen when I was a state legislator 25 years ago.

While in Des Moines for the session, I broke my new eyeglasses. It would be several days until I could get another pair from my optometrist in Manchester, but I had a copy of my prescription and thought it would be simple to have a new pair made elsewhere.

But none of the optical stores I contacted would sell me a replacement pair of glasses unless I also paid for a new exam by their optometrist. (Any pharmacy in the country would have filled a prescription for medication from my physician, but unlike optical prescriptions, medical prescriptions can’t be written by the pharmacists who fill them, so most pharmacists have no incentive to require redundant medical exams.)

With no time to search for an optometrist who would accept my existing prescription, my only choice was to pay for an unnecessary eye exam. As legislators often do when suffering one of life’s petty annoyances, I introduced a bill. But opposition from the optometry association meant it took several years to pass a law requiring optometrists to honor recent prescriptions of other optometrists.

Other costs of occupational regulation are less obvious but no less real. The causes of reduced economic mobility in the U.S. are numerous and complex, but one factor is that licensure or certification is now required for almost 30 percent of American jobs, up from 5 percent of jobs in the 1950s.

The Institute for Justice points out that excessive licensure requirements disproportionately affect ethnic minorities, low-income workers and women re-entering the labor market in midlife. Kleiner’s research indicates that regulating an occupation significantly reduces the job growth in that occupation. Labor market inefficiency is created when differences in state licensing requirements discourage licensees in one state from pursuing opportunities in another.

During the early and mid-1980s I was involved in many licensure debates as a member of the Professional and Occupational Regulatory Commission, which was created by the Legislature to screen new licensure proposals. These proposals had a few things in common:

• They were all initiated by members of that profession, never by members of the general public.

• New entrants to the profession would have to meet much stricter education and testing requirements than existing members of the profession.

• Most current members of the profession would automatically qualify for licenses without having to meet the new standards.

• The board responsible for “public” regulation of the profession would be dominated by members of that profession.

Many advocates sincerely believed licensure was in the public interest, but that belief almost always co-existed with self-interest motives, such as gaining eligibility for Medicaid and insurance reimbursement, reducing competition from new entrants into the profession or reducing competition from other related professions.

Sometimes college departments would join in the push to license a profession, which would, of course, require new entrants to get degrees from their departments. Some proposals were motivated in part by pride and status — the desire to be recognized as a “professional,” rather than just a person with a job.

Of course, there are valid reasons to restrict entry into some fields. But in a society that values individual freedom from government intrusion into our lives, when is it legitimate to use the police power of the state to bar people from their chosen occupations?

Licensing is justified when the health or safety of citizens is at risk, consumers lack sufficient knowledge to judge the qualifications of the provider, and normal legal sanctions and market forces are insufficient to enforce good behavior or weed out the incompetent.

If someone is going to take out my appendix, defend me in court or design a high-rise building, the government should make sure that person has the appropriate knowledge and skills. But if I want to pay someone to shampoo my hair, build my casket or select furniture for the lobby of my office, the government shouldn’t decide who can compete for those jobs.